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A state-owned Chinese bank will link the digital yuan to the “world’s biggest small commodities market” via the latter’s payment platform.
Per the People’s Daily, the new “cross-border” CBDC drive is the brainchild of the Bank of China and the city of Yiwu.
Not to be confused with the central People’s Bank of China, the Bank of China is a leading commercial bank.
It is majority-owned by the Chinese state and is thought to be the world’s fourth-largest financial institution.
Yiwu’s Futian District, in Zhejiang Province, is home to a 7km-long market.
Its thousands of vendors retail “small” commodities to importers the world over.
The Bank of China deal will see digital yuan interoperability options added to a payment platform named Yiwu Pay.
Yiwu launched Yiwu Pay, a “global payment platform,” earlier this year, claiming that it could provide service to “100 countries and regions.”
The platform can handle payments in 16 fiat currencies, allowing customers and vendors to make and receive international payments.
Yiwu, the world's largest wholesale market for small commodities in E China's Zhejiang, launched its own global payment platform "Yiwu Pay" on Mon. Its service has covered over 100 countries and regions and provides 16 mainstream currencies for international payments. pic.twitter.com/QowjQkrcgv
— People's Daily, China (@PDChina) February 22, 2023
The development allows merchants to process digital yuan “cross-border payments.”
It will also integrate “cross-border capital circulation” compliance solutions for digital CNY customers.
The solution will also adhere to an array of foreign exchange compliance protocols.
The bank said that the solution had already been “successfully implemented” by some Yiwu-based merchants.
Chinese Digital Yuan Making Cross-border Progress
The breakthrough comes months after Yiwu announced that 90% of its vendors accept digital yuan payments.
The city claimed that its market was collectively aiming to process some $1.5 billion worth of CBDC transactions before the end of the year.
Yiwu is unofficially known as the “world’s capital of small commodities,” manufacturing and trading items such as clothing, toys, household goods, smartphone accessories, and jewelry.
Its vendors have established trade relations with more than 230 countries and regions around the world.
The physical Futian District marketplace remains popular among tourists.
But in recent years, the city has looked to expand its online presence, supplying many leading international e-commerce platform clients.
Chinese banks have been expanding their efforts to move the digital yuan into the cross-border payments space in recent months.